OREANDA-NEWS. Fitch Ratings has assigned ratings to Sequoia Mortgage Trust 2015-1 (SEMT 2015-1) as follows:

--\$287,976,000 class A-1 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$287,976,000 class A-2 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$287,976,000 class A-3 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$215,982,000 class A-4 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$215,982,000 class A-5 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$215,982,000 class A-6 certificate 'AAAsf'; Outlook Stable;
--\$71,994,000 class A-7 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$71,994,000 class A-8 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$71,994,000 class A-9 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$230,381,000 class A-10 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$230,381,000 class A-11 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$230,381,000 class A-12 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$57,595,000 class A-13 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$57,595,000 class A-14 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$57,595,000 class A-15 certificate 'AAAsf'; Outlook Stable;
--\$14,399,000 class A-16 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$14,399,000 class A-17 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$14,399,000 class A-18 certificate 'AAAsf'; Outlook Stable;
--\$26,257,000 class A-19 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$26,257,000 class A-20 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$26,257,000 class A-21 certificate 'AAAsf'; Outlook Stable;
--\$314,233,000 class A-22 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$314,233,000 class A-23 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$314,233,000 class A-24 exchangeable certificate 'AAAsf'; Outlook Stable;
--\$314,233,000 class A-IO1 notional certificate 'AAAsf'; Outlook Stable;
--\$287,976,000 class A-IO2 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$287,976,000 class A-IO3 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$215,982,000 class A-IO4 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$215,982,000 class A-IO5 notional certificate 'AAAsf'; Outlook Stable;
--\$215,982,000 class A-IO6 notional certificate 'AAAsf'; Outlook Stable;
--\$71,994,000 class A-IO7 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$71,994,000 class A-IO8 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$71,994,000 class A-IO9 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$230,381,000 class A-IO10 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$230,381,000 class A-IO11 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$230,381,000 class A-IO12 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$57,595,000 class A-IO13 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$57,595,000 class A-IO14 notional certificate 'AAAsf'; Outlook Stable;
--\$57,595,000 class A-IO15 notional certificate 'AAAsf'; Outlook Stable;
--\$14,399,000 class A-IO16 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$14,399,000 class A-IO17 notional certificate 'AAAsf'; Outlook Stable;
--\$14,399,000 class A-IO18 notional certificate 'AAAsf'; Outlook Stable;
--\$26,257,000 class A-IO19 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$26,257,000 class A-IO20 notional certificate 'AAAsf'; Outlook Stable;
--\$26,257,000 class A-IO21 notional certificate 'AAAsf'; Outlook Stable;
--\$314,233,000 class A-IO22 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$314,233,000 class A-IO23 notional exchangeable certificate 'AAAsf'; Outlook Stable;
--\$8,808,000 class B-1 certificate 'AAsf'; Outlook Stable;
--\$6,776,000 class B-2 certificate 'Asf'; Outlook Stable;
--\$3,727,000 class B-3 certificate 'BBBsf'; Outlook Stable;
--\$1,694,000 non-offered class B-4 certificate 'BBsf'; Outlook Stable.

The \$3,557,837 non-offered class B-5 certificate is not rated by Fitch.

The ratings for SEMT 2015-1 reflect an update from the expected ratings assigned on Jan. 21, 2015. The rating for the class A-25 has been withdrawn because the bond no longer exists. The A-19 bond is now an exchangeable certificate. The A-21 bond is now an initial exchangeable certificate. The balances of the class A notes have been updated to reflect the final structure.

KEY RATING DRIVERS

Strong Collateral Attributes: The collateral pool consists of 30-year, fixed-rate, fully documented loans to borrowers with strong credit profiles, low leverage and substantial liquid reserves. Third-party, loan-level due diligence was conducted on 83% of the pool, the results of which, in Fitch's opinion, indicate strong underwriting controls.

Inclusion of Non-QM Loans: Of the total pool, 465 loans, or 97%, on primary or secondary residences have application dates of Jan. 10, 2014, and are therefore subject to the Ability-to-Repay (ATR)/Qualified Mortgage (QM) Rule. Of these, four loans were originated as non-QM with one having a debt-to-income ratio in excess of 43% and the remainder having minor exceptions to Appendix Q documentation requirements.

Third-party due diligence confirmed that all loans were underwritten in compliance with each originator's guidelines for meeting ATR requirements. However, Fitch made adjustments to both its probability of default (PD) and loss severity (LS) assumptions to account for the document deficiencies and non-QM status. The remaining 474 loans in the pool were classified as safe harbor QM (SHQM), for which no adjustment was made, or not subject to the ATR/QM Rule (13 loans).

Quality Aggregator and Primary Originator: Fitch has reviewed Redwood Residential Acquisition Corporation (Redwood) as an aggregator, and First Republic Bank (FRB), the largest contributing originator to the pool, as an originator and considers both to be above average. Fitch factored these qualitative strengths into its loss expectations. Fitch believes that Redwood's sound acquisition strategy is also reflected in the very strong performance of the post-crisis Sequoia pools. Similarly, Fitch considers FRB's low delinquency and default rates on its securitized loans supportive of its view on the quality of FRB's origination platform.

Immaterial Due Diligence Exception: Roughly 34% of FRB-originated loans were subject to a due diligence review, which is above Fitch's minimum threshold of 20% but less than the 100% review seen for other originators. Given Fitch's assessment of FRB as an above-average originator, the agency is comfortable with the level of diligence performed on the FRB loans.

However, secondary valuation products were not obtained as part of the third-party due diligence review for the FRB originations. Based on its criteria, the loans subject to this review exception are viewed by Fitch to be consistent with that of a 'D' grade with respect to valuation. To account for this deviation, Fitch considered FRB's strong operational quality as well as the bank's strong historical performance history as a mitigant and did not make any adjustment to its loss expectations.

Cash Flow Structure: The transaction features a traditional senior-subordinate, shifting-interest structure. Furthermore, the trust provides for expenses, including indemnification amounts and costs of arbitration, to be paid by the net weighted average coupon (WAC) of the loans, which does not impact the contractual interest due on the certificates.

RATING SENSITIVITIES

Fitch's analysis incorporates sensitivity analyses to demonstrate how the ratings would react to steeper market value declines (MVDs) than assumed at both the metropolitan statistical area (MSA) and national levels. The implied rating sensitivities are only an indication of some of the potential outcomes and do not consider other risk factors that the transaction may become exposed to or be considered in the surveillance of the transaction.

Fitch conducted sensitivity analysis determining how the ratings would react to steeper MVDs at the national level. The analysis assumes MVDs of 10%, 20%, and 30%, in addition to the base case projected 6.3% for this pool. The analysis indicates there is some potential rating migration with higher MVDs, compared with the model projection.